Exam 4: Professional Ethics

An officer participates in litigation against the CPA firm. This is an example of which type of threat to compliance with which of the rules under the AICPA's Code of Professional Conduct?

An advantage of the principles of professional conduct in the Code of Professional Conduct is that they are more easily enforced than are the specific rules of conduct.

Ethical values such as caring have been incorporated into the laws, as caring now been defined enough to be legally enforceable.

Each state also has rules of conduct that are required for licensing by the state.

CPAs are prohibited from which of the following forms of advertising?

Nonaudit services provided that are not prohibited by the Sarbanes-Oxley Act and SEC rules must be preapproved by the company's audit committee.

The Conceptual Framework for AICPA Independence Standards can be used when making decisions on ethical matters not explicitly addressed in the Code.

Information obtained by a CPA from a client is legally privileged in federal court.

Don Crosby, a partner in a national CPA firm, has just learned that his self-sufficient daughter has accepted a position as the CFO of Sunglasses, Inc., a current client within the office with which he is employed. Explain the independence ramifications on 1) Don's independence, 2) his office, and 3) the firm's independence.

Julie and Lisa are sisters. Julie is a CPA auditing the company where Lisa works. Julie's independence is impaired if

A CPA firm may charge a contingent fee for

Membership in the AICPA can be terminated without a hearing for

The members of a client's "audit committee" should be

Under the rules and interpretations of the AICPA Code,

Adverse interest is the threat that a member will not act with objectivity because their interests are opposed to the client's interests.

What are the six Ethical Principles stated in the Code of Professional Conduct? Briefly discuss each principle. Are these principles enforceable?

A partner of a CPA firm performing the audit of the Red Cross may be an honorary director of the Red Cross and also vote and participate in management functions at the Red Cross.

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances?

Companies are required to disclose in their proxy statement or annual filings with the SEC the total amount of audit and non-audit fees paid to the audit firm for the two most recent years. Which of the following is not one of the categories of fees that must be disclosed?

SEC and PCAOB rules allow CPAs to provide tax services for audit clients, including tax services for company executives which oversee financial reporting.